Facebook Ad Performance on the Rise: Report

Facebook is turning into a booming business for advertisers.

The social network had an impressive third-quarter growth in ad performance, according to new data from analyst site Marketing Charts.

Several factors, “including a refined and more engaging product inventory that has skewed more towards high-performing news feed units, and better audience targeting capabilities,” have contributed to impressive click-rates on retailer ads, says the report.

In fact, in the past year, click-through rates have grown by 3.75 times and retailers are seeing an average of 152 percent return on investment.

The ads the article speaks of are the small, square ads that pop up in users’ newsfeeds alongside updates from their Facebook friends. The ads are tailored to users’ interests.

Click-through-rates for retailers advertising on Facebook have grown from 0.05% in Q3 2012 to 0.2% in Q3 2013;

CPCs dropped from $0.62 in Q3 2012 to $0.32 in Q1 2013, and have remained steady at $0.45 for the past 2 quarters;

ROI has been more variable, at 96% in Q4 2012, but soaring to 203% in Q1 2013. In Q2 2013, ROI stood at 152%, with Q3?s figure of 109% said underrepresented due to October revenue not being fully realized and attributed to September ad spend;

Facebook mobile CPCs increased 70% from Q1 to Q3, averaging out at $0.40 for iOS and $0.18 for Android;

RPC on iOS was a marked 6.1 times higher than Android during the first three quarters of the year ($0.94 vs. $0.15), with ROI an impressive 17.9 times higher (162% vs. -10%), although the same caveat applies to Q3 ROI figures;

CTRs are not proving to correlate well with ROI: Android averaged the higher CTR than iOS, but had far less return;News feed now accounts for about 80% of retailers’ ad spend, up from roughly 35% in Q1;

CTRs for retailer ads in the news feed were about 26.4 times higher than right-hand side ads during the first three quarters of the year.

Facebook ads are so popular, in fact, the site is beginning to push Google out of the market.

The search engine giant, just two years ago, held onto 57 percent of U.S. mobile Internet ad revenue. Today its share is 48 percent.

While Facebook isn’t really stealing any of Google’s current revenue, it may be contributing to the company’s ad decline by taking prospective ad dollars, says an article by The Motley Fool.

“For instance, marketers with limited budgets may sometimes be forced to choose between Google’s ad networks and Facebook’s ad products — especially as Facebook’s value proposition for advertisers continues to grow,” it says, adding Facebook’s ad revenue, which accounts for 88 percent of its total revenue, was up 60 percent over last year.

Facebook also has plans to expand its ads from standalone ads consumers can click in to auto-play video ads, which analysts predict could be a cash cow for the website.

Earlier this year, Facebook began rolling out video advertising to a test group of American Smartphone users. Analysts predict the ads could generate $1 billion in 2014 and within the next six years could be generating up to $6.5 billion.

Reports suggest Facebook will officially roll out the ads before the end of this year, but only in the U.S. European Facebook users won’t see the ads until late 2014, with Asia close behind in 2015 and the rest of the Facebook market in 2016.